Free to Read: screening for Aim’s big movers

To kick off our week of Aim coverage here’s a quick look at the junior market’s best and worst performers

Photo by Isaac Smith on Unsplash

Following your feedback and suggestions, we’re expanding our small caps coverage starting with a look at the Aim 100’s top companies. We had, in fact, already written about quite a few of them, as you can see from the list below. But there are so many more great companies on the junior market that we’re going to have a focused push to cover them over the next week or so.

But where do you start hunting for great investment opportunities in such a diverse and vibrant market, which has substantially outperformed its main market counterparts over the past year? I’d suggest by taking the lie of the land with a few simple stock screens, and that the best place to start is some simple price screens using SharePad.

Best and worst 12-month performance

Aim has had a good pandemic, but it’s been better for some of its constituents than others. On a total return basis, three quarters of the market’s shares  are in positive total return territory over the last 12 months, 9 have doubled and 2 have more than trebled, led by hydrogen specialist AFC Energy and reflecting the excitement over alternative sources of energy as the world tries to clean itself up.

Best 12-month Total Return

At the other end of the spectrum, we have seen few shares really causing investors sleepless nights – only Covid testing specialist Novacyt has lost more than half of its value since the start of the year, giving up most of its gains since the approval of vaccines at the end of 2020 and continuing to make new lows.

Worst 12-month Total Return

Best and worst 90-day performance

Momentum is a powerful factor in market performance, especially so this year to the benefit of Aim investors.

However, looking over three months and we can see indications that the junior market’s momentum is slowing – 54 companies have generated positive total returns over the last 90 days. In the case of the year’s best performing share, AFC Energy, the momentum has reversed in recent months, a cautionary tale for those using momentum alone as a signal to buy – the lesson being that it can reverse quickly.

Best 3-month price change

It’s a similar story at the market’s online retailers, former favourites Asos and Boohoo – both had benefited from the switch to online shopping during the pandemic, but have delivered disappointed figures since, seeing their shares give up most of the gains made in the first half of the year. But, as we’ve written before, if you’re prepared to hold your noses and be patient there could be some value in the battered fast fashion e-tailers.  

Worst 3-month price change

I’m also intrigued by the divergence in performance across the precious metal miners, something we’ll be looking at in the coming week as Phil and I look in more depth at the junior market’s most interesting investment opportunities. It’s a similarly contrasting story between ESG highflier Impax Asset Management and bottom of the class Greencoat Renewables, a divergence which requires further investigation.    

New highs and lows

Another way of probing for momentum is to see which companies are making or at or close to making new one-year highs and lows, which gives us a more current view of the shares with momentum behind them –positively or negatively. This gives us a slightly different cut of companies, including James Halstead which is in our Quality Shares portfolio and which Phil wrote about here.

Fewest days since new 12-month high

However, at this point I’m interested in companies that are demonstrating positive momentum across multiple time periods, a signal that the trend is more entrenched. Atalaya Mining appears in all three lists;  Next Fifteen and Inspecs are among the year’s best performers, and continue to make recent highs albeit with slowing momentum; and Hotel Chocolat and Uniphar are showing more recent strength.

Fewest days since new 12-month low

It’s interesting to see that three companies demonstrating strong negative momentum, Victorian Plumbing, Revolution Beauty and tinyBuild,  are all recent IPOs – a warning that late cycle flotations often don’t live up to the promises of their backers.   

I’ve been looking at price moves alone with this particular set of screens, which obviously tells us very little about the businesses behind the performance or which factors have been behind the momentum. Over the course of the week, I’ll be running more basic screens to add a bit more colour to Aim’s big picture, before Phil and I provide the detail with write ups of the market’s most interesting themes and companies.

Here’s are the Aim 100 constituents that we’ve covered already:

Patience is a virtue for Jet2 investors

YouGov: Strong second half momentum bodes well for future growth

James Halstead: So much to like but it needs more growth

Hotel Chocolat: High expectations

Is boohoo’s margin squeeze a temporary blip?

Judges Scientific: Order book and operating leverage leaves room for more forecast upgrades

Invest-ability daily 11/10/21: Fashion Victim (As0s)

Quality Shares Weekly: 24th September 2021 (Strix)

Quality Shares Weekly: 17th September 2021 (Fevertree Drinks)

Quality Shares Weekly: 10th September 2021 (Frontier Developments and Secure Income Reit)

Enjoying this article?   

Join our list for more quality insight and analysis. No spam, unsubscribe any time.

%d bloggers like this: